RELIGIOUS GROUP IN CONFLICT WITH STATE OVER WORKERS’ COMP LAW

A dispute brewing for more than two years between the state and a North County religious organization may have been quietly resolved late last year.

The conflict began in June 2010 when inspectors for the state Division of Labor Standards visited the Yellow Deli, a funky sandwich-and-coffee cafe in downtown Vista, and Morning Star Ranch in Valley Center. Both are owned by a group called Twelve Tribes or The Community of Apostolic Order.

State inspectors asked workers at the restaurant and ranch for proof of workers’ compensation insurance and were told that there was no insurance policy because the establishments had no employees, only volunteers.

The state issued a $10,000 fine for the Yellow Deli — $1,000 per worker — and a $4,000 fine for the ranch, but the Twelve Tribes appealed the fines, saying the deli and the ranch were owned by the religious community for the benefit of its members.

James Peterson, a lawyer who represented the group, said Monday that a “confidential settlement” with the state was reached in September. Peterson declined to discuss the terms of the agreement.

A spokesman for the state said Tuesday that he did not have information immediately available about any potential agreement. He said the attorney representing the state in the case was unavailable for comment until next week.

Terry Francke, the general counsel of the open-government group Californians Aware, said he could think of no reason why the agreement would be confidential.

The Twelve Tribes was recognized as a religious nonprofit 501(d) by the Internal Revenue Service in 1977, according to case documents filed in San Diego Superior Court. Under IRS rules, a religious organization is allowed to operate businesses for the benefit of its members.

In a similar case, the state of Vermont determined in 1994 that the Twelve Tribes group was exempt from that state’s workers’ compensation requirements because of its status as a religious nonprofit, according to case documents.

The Twelve Tribes opened the Yellow Deli, a popular restaurant in Vista, in February 2010. The same group runs another Yellow Deli restaurant in Valley Center and the Morning Star Ranch, where members grow the fruits and vegetables used in the food sold at the delis.

The produce is also sold to local markets and at farmers markets, according to case documents. The businesses generate revenue that is used to pay for the group’s food, utilities and other necessities.

Members of the group work at the businesses, but they are not paid money, according to case documents.

“Every member working for the Yellow Deli and the Morning Star Ranch live, in their own way, according to the early teachings of the Book of Acts — the way Christ lived in the early days, all in communal fashion,” according to documents. “In exchange, The Community provides for the physical needs of its members, such as food, clothing, shelter, medical expenses, etc.”

According to case documents, the state argued that the Yellow Deli and Morning Star Ranch each had business licenses with individual members listed as owners. For example, the Yellow Deli had a license listing Lee Keener and his wife, Anna Keener, as the owners.